Q4 & FY 2019 Results Focus on our potential The Hague, 24 February 2020
Warning about forward-looking statements: Some statements in this presentation are ’forward - looking statements‘. By their nature, forward -looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are outside of our control and impossible to predict and may cause actual results to differ materially from any future results expressed or implied. These forward-looking statements are based on current expectations, estimates, forecasts, analyses and projections about the industries in which we operate and management's beliefs and assumptions about possible future events. You are cautioned not to put undue reliance on these forward-looking statements, which only speak as of the date of this presentation and are neither predictions nor guarantees of possible future events or circumstances. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events, except as may be required under applicable securities law. Use of non-GAAP information: In presenting and discussing the PostNL Group operating results, management uses certain non-GAAP financial measures. These non-GAAP financial measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures. Non-GAAP financial measures do not have standardised meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The main non-GAAP key financial performance indicator is underlying cash operating income. The underlying cash operating performance focuses on the underlying cash earnings performance, which is the basis for the dividend policy. In the analysis of the underlying cash operating performance, adjustments are made for non-recurring and exceptional items as well as adjustments for non-cash costs for pensions and provisions. For pensions, the IFRS-based defined benefit plan pension expenses are replaced by the non-IFRS measure of the actual cash contributions for such plans. For the other provisions, the IFRS-based net charges are replaced by the related cash outflow. As of 2020, the main non-GAAP key financial performance indicator is normalised EBIT. Normalised EBIT is derived from the IFRS-based performance measure operating income adjusted for the impact of project costs and incidentals. Aside from adjustments for restructuring-related costs, all currently adjusted non-recurring and exceptional items within underlying cash operating income are also normalisations within normalised EBIT. Published by: PostNL NV Prinses Beatrixlaan 23 2595 AK The Hague The Netherlands Additional information is available at postnl.nl 2
Q4 & FY 2019 Results 2019 I. Key takeaways II. Strategy and main strategic steps III. Business performance Q4 2020 I. Focus on our potential II. Outlook 2020 Financials I. Performance Q4 & FY 2019 II. Development key metrics 2020 Concluding remarks 3
Key takeaways 2019 2019 I • Strong business performance in Q4 boosts revenue and cash for the year • E-commerce now represents more than 50% of revenues, ahead of schedule • Underlying cash operating income FY 2019 at €176m, at high end of outlook range of €150m - €180m • FY net cash from operating and investing activities up €188m to €169m* • €48m cost savings, within guidance range of €45m - €65m • Acquisition of Sandd completed; networks fully integrated since 1 February 2020 • Divestment of non-core activities (ao Postcon and Nexive) underpins increasing focus on home markets • Ranked in top-three sustainable companies worldwide in the sector by Dow Jones Sustainability Index • 19% of parcels and mail delivered emission-free in the last mile * Before acquisitions The preferred logistics and postal solutions provider in the Benelux region 4
Summary financials 2019 2019 I (in € million) Revenue UCOI Net cash from operating and investing activities 1,672 121 Parcels Parcels Before acquisitions Mail in the Mail in the 1,606 76 Netherlands Netherlands 2,844 176 169 PostNL PostNL PostNL Proposed dividend UCOI margin Cash conversion 135 7.2% Parcels Normalised EBIT Mail in the 4.7% 107 Netherlands Free cash flow Per share, fully €0.08 79% 6.2% paid as interim dividend PostNL 5
Confidence in our strategy 2019 II Our ambition is to be your favourite deliverer Accelerate digitalisation & innovation Help customers grow their business Secure accessible and reliable postal services collect sort Attract and retain motivated employees deliver Reduce environmental impact Deliver profitable growth and generate Ambitious ESG targets sustainable cash flow The preferred logistics and postal solutions provider in the Benelux region 6
Be the leading e-commerce logistics company in Benelux 2019 II 7 May 2019: Capital Markets Day Milestones 2019 Implementation direct to retail after one delivery attempt results in efficiency and is more sustainable 3 new depots in 2019 25 depots Operational in total Improved network utilisation: • Expansion of electrical and green-gas fleet • extra shutes • Further roll-out city logistics program • opening cross-dock Design SPS finalised FY 2019 • Contract renewals 12% • Price increase single parcels 2020 • Indexation volume growth • Price adjustment for parcels >23 kg Growth rate e-commerce market slowing down Executing on our aim to better balance volume and value 7
Integration of PostNL and Sandd postal networks 2019 II completed on 1 February 2020 22 October 2019: Transaction closed 1 February: One strong nationwide postal network 20,000 Over 4,300 mail deliverers new colleagues joined PostNL 11,000 mail boxes An average of 7 million 30% letters per day, additional mail volume 5 days per week 8,500 calls with 3,400 Close to Sandd customers 4,000 PostNL locations new customers 2,000 extra clients for collect and/or delivery service Secure accessible and reliable postal services
Parcels: Result improved 2019 III Revenue Underlying cash Volume growth Revenue mix operating income Spring Parcels Benelux €471m €42m 10.0% FY 2019 Q4 2019 Logistics & other €1,672m Q42018 €439m €36m FY2019 €1,672m (+7.5%) €121m (margin 7.2%) 12.4% Further revenue growth Parcels Benelux • Resulting in volume effect of €37m and negative price/mix effect of €7m, mainly due to a shift in international parcels Result Parcels improved • Performance Parcels Benelux up €1m • Volume/price/mix resulted in performance improvement of €4m • Organic cost increases (collective labour agreements and indexation) of €5m • Better operational efficiency from improved drop duplication and hit rate of €2m • Improving performance Logistics and Spring • Cash flow up €10m despite higher capex, supported by positive development working capital 9
Mail in the Netherlands: Good business performance 2019 III FY 2019 cost savings €48m within indicated range of €45m - €65m Revenue Underlying cash Total cost savings Addressed mail volume operating income decline (excluding Sandd) €492m €48m €15m 9.6%* Q4 2019 of which €10m at Mail in the Netherlands Q42018 €483m €71m FY2019 €1,606m ( -4.3%) €76m (margin 4.7%) €48m 9.7%* Business developments • Strong sales in peak season • Volume declined by 9.6%, mainly driven by ongoing substitution • Delivery quality at 94% for FY 2019 • Last months of 2019 challenging with capacity issues linked to preparations for the integration of Sandd Result impacted by acquisition of Sandd • Impact from volume/price/mix effect of €(19)m and autonomous cost increases of €6m • €10m cost savings • Less cash out for pensions and provisions (€4m) • Other effects impacted result by €(12)m , mainly related to the acquisition of Sandd and unaddressed mail activities • Cash flow up € 13m mainly due to positive development working capital and less cash out for pensions and provisions 10 * Adjusted volume decline Q4 2019 10.3%, corrected for one extra working day; FY 2019 9.9%
Q4 & FY 2019 Results 2019 I. Key takeaways II. Strategy and main strategic steps III. Business performance Q4 2020 I. Focus on our potential II. Outlook 2020 Financials I. Performance Q4 & FY 2019 II. Development key metrics 2020 Concluding remarks 11
Parcels: Improving balance between volume and value 2020 I Assumed volume growth 7% - 9% in 2020 Yield development • Mainly explained by slow-down in Smart yield management e-commerce market growth • Improved pricing • Mixed growth pattern – less growth in more • Implementation peak season pricing in Q4 2020 mature segments • Price increase single parcels • Lower consumer confidence • Adjusted prices for parcels > 23 kg • Multivendorshipandincreasing # of parcels via • Indexation platforms impactingvolume growthtemporarily +12.4% +7% -9% +21.3% +16.9% +13.5% +9.8% +8.4% +9.2% +13.2% +6.0% 100m 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Main drivers for revenue growth in Parcels 12
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